The International Finance Corporation (IFC) has committed up to $25 million to support Acumen’s Hardest-to-Reach (H2R) Fund, a significant $200 million initiative aimed at enhancing energy access in the most underserved regions of Sub-Saharan Africa. This commitment by the IFC to the fund’s senior tranche aligns with its broader strategy to combat energy poverty and foster sustainable development in areas where access to electricity is critically lacking.
The H2R Fund is ambitiously set to provide electricity to 72 million individuals over the next ten years, with the added environmental benefit of averting 5 million tonnes of CO2 emissions. The fund’s structure comprises three equity tranches—senior, mezzanine, and junior—each valued at $60 million, and is complemented by a $20 million grant facility.
Focused on financing off-grid solar enterprises across 16 countries with notably low electrification rates, the H2R Fund specifically targets Pay-as-you-Go (PayGo) solar companies. These companies offer solar home systems to low-income households, enabling them to make small, manageable payments over time. This innovative financing approach brings clean energy within reach for communities where traditional grid expansion is either too expensive or logistically challenging.
The fund also includes a grant component that encourages solar companies to lower interest rates for consumers by achieving certain key performance indicators (KPIs), such as reaching a set number of first-time electricity users.
Acumen’s H2R Fund is strategically designed to channel investments to the most vulnerable populations, ensuring both financial and social returns. An example of the fund’s impact is Yellow Malawi, which has recently received a $2 million investment. This investment, arranged as a two-tranche blended-currency loan, will enable Yellow Malawi to extend its services to an estimated 182,000 individuals.
Acumen, known for its pioneering role as a nonprofit impact investment fund in the off-grid solar sector, continues its legacy with the H2R Fund by providing patient capital to social enterprises.
The IFC’s substantial investment of $25 million underscores its dedication to fostering sustainable development through impact investing in regions with pressing infrastructure gaps. By taking a senior stake in the fund’s capital stack, the IFC reduces risk for subsequent investors, thus attracting more capital to these vital sectors.
Employing a blended finance approach, the H2R Fund combines commercial investments, concessional capital, and grants to achieve both financial returns and social impact. This strategy effectively leverages diverse sources of capital to tackle energy poverty, support sustainable business models, and contribute to the achievement of global climate objectives.
The H2R Fund by Acumen stands as a testament to the transformative power of impact-focused investments, demonstrating how innovative financial structures can address critical energy needs and foster the growth of off-grid solar enterprises in Sub-Saharan Africa.
